JCI Early In The Week Of Pressured Vulnerables, Check Out Stock Recommendations

JAKARTA - The Composite Stock Price Index (JCI) is vulnerable to pressure in early trading week, Monday, May 27, after rising 0.51 percent to 7,222.38 at the close of trading before the long holiday, last Wednesday, May 22.

Phintraco Sekuritas in his research said that in the latest minutes, the Fed's central bank reiterated the inflation target at the level of 2 percent on an annual basis or year-on-year (YoY).

Responding to the minutes, the CME FedWatch Tools recorded an increase in the chance of maintaining the benchmark interest rate of 5.25-5.5 percent in September 2024 to 49.3 percent. The remaining 25 bps cut is 45.7 percent for the same period.

However, Nasdaq managed to rally because it was supported by Nvidia's stock performance over the past week. On the other hand, the Dow Jones Industrial Average (DJIA) has recorded its first weekly weakening in the past five weeks.

Responding to existing sentiment, the rupiah exchange rate will most likely weaken significantly at the start of trading this week.

"This condition is estimated to coincide with the capital outflow projection in the same period. Thus, the JCI is prone to pullback at the beginning of the week. The closest support is currently in the range of 7,150," explained the research by Phintraco Sekuritas.

The market will be colored by external economic data, including US economic growth in the first quarter of 2024 which is expected to slow to 1.5 percent on a quarterly basis (quarter-on-quarter/QoQ) from 3.4 percent QoQ in the fourth quarter of 2023.

Apart from Uncle Sam's country, Germany is also scheduled to release inflation data which is expected to increase to the level of 2.4 percent YoY in May 2024 from the position of 2.2 percent as of April 2024.

"This condition can change the market's view of the timeframe of cutting the ECB (European Central Bank) benchmark interest rate. The UK and US markets are off Monday," explained Phintraco Sekuritas.

According to Phintraco Sekuritas, the top picks this week are expected to switch to defensive stocks such as ICBP, INDF, UNVR, JSMR, and PGAS.